2014.05.31. When will the bull market end?

Aside from the historically large 188% size and 62 month length of the current bull market and aside from the anemic recovery and recently deteriorating economic landscape, the largest technical reason I can point to for an imminent 20%+ correction is the late Terry Laundry's T-Theory Indicator (FAGIX:VUSTX). All 4 multi-month divergences since 2000 have resulted in 20%+ corrections and have occurred in a pattern of 2000, 2004, 2007, 2011 and ????.  In the last 25 years, there were only 2 other times in which there was a negative divergence for 5-6+ months as we see now versus Dow/SPX. The first lasted about 1 year after a 2-year SPX consolidation in 1993-1994 and just after a positive divergence oddly enough. The 2nd lasted about 8 months after a 6-year 300% SPX gain in 2000. I think you know which one resembles 2014 better. Having said that, even the 2000 scenario would support another 3+ months of SPX rally and Tony Caldaro's expectation for a Q3/Q4 bull market top albeit with one more large correction and new high in between.

Although most of the indicators I follow are short-term to intermediate-term, another technical event I've been expecting is a retest of 1576, the previous bull market high that was surpassed in April 2013. I decided to test my theory. When I look back at the history of the Dow since 1900 for cases when a 3+ year bull market rally makes an all-time high by more than 10%, I found that the rally always ends approximately 1 year after the new record high as it did in 1906, 1926, 1956 and 1984. But, I should also mention that only the 1906 example actually breached the breakout level and that was after the first downtrend held about 5% above it, then the 2nd downtrend consolidated near it followed by the 3rd downturn which rapidly collapsed for a near-50% total drop. The other 3 cases retraced about 50-80% of the old high without coming that close to breaching it.  There were other examples of bull markets making new all-time highs in faster fashion or not exceeding the high by 10%+ which probably both left them more susceptible to breaching the old high considerably. Utilizing this information in June 2014, it appears SPX is a little over 1 year beyond surpassing its old 1576 high which leaves it susceptible to a 50-80% retracement of it. If the retracement is closer to 100% or actually breaches 1576, SPX is susceptible to a HUGE drop probably after some consolidation near 1576. If we assume SPX will top at 1950ish, a 50-80% retracement of 1576 would be 1650-1770. That would only be a 10-15% downtrend and might not even qualify as a bear market. So, even if we get the year 1906 scenario, we may get a strong bounce from that 1650-1770 area but whether or not it makes a new high as Tony Caldaro expects is another question. What if Tony Caldaro's P3 actually marks the end of another ABC in the choppy action since year 2000? Or maybe the P5 high is only slightly higher or even fails.

Intermediate-term, my discretionary spending analysis indicator is calling for a significant 5-10% bottom possibly in mid-June but likelier in the first half of August. Most significant downtrends in its history last 5+ weeks and 8-12 weeks is not uncommon, so late June or early July will likely form a top and possibly sooner. Will SPX continue a choppy rally thru June to 1950-2000 before making a 50-80% retracement of 1576? Will SPX drop 10% imminently to the recent 1737 bottom to satisfy the 50%+ retracement of 1576 and then rally to a new or failed high all by early-to-mid-July followed by fuller retest of 1576 making for a very volatile 2-3 months? I don't know. The last 5 summers have been surprisingly volatile. But, in any case, you can obviously tell I'm expecting SPX to approach the 1737 bottom in coming months and if SPX finds a way to actually pierce 1576, it is historically not a good sign and, after a multi-week or multi-month consolidation, could lead to a cascade situation probably to the 1000-1150 support zone. Based on history, bulls need SPX to find support at 1650+ if at all possible on the next deep downtrend or else the wheels could fall off. Good luck.